Low Income in Canada: 2000-2006 Using the Market Basket Measure - October 2008

Highlights

The Market Basket Measure (MBM) is a measure of low income based on the cost of a specified basket of goods and services. It was designed to complement two Statistics Canada measures of low income: the Low Income Cut-offs (LICOs) based on average consumption patterns and the Low Income Measure (LIM) based on median incomes. The MBM is far more sensitive to geographical differences in living costs than these other measures.

Seven years of data based on this measure are now available. This makes possible an examination of low income trends over a significant time period as well as the persistence of low income for various groups over two five-year periods (2000 to 2004 and 2002 to 2006).

This report also provides data based on the paid work status of the main income recipient (MIR) of economic families and on five groups who are particularly at risk of persistent low income: lone parents with at least one child under age 18; unattached individuals aged 45-64; persons with work-limiting physical or mental disabilities; persons immigrating to Canada within the past 10 years; and Aboriginal Canadians living off-reserve.

Incidence of Low Income

• The national incidence of low income has undergone a downward trend over the past seven years, falling from 14.6% in 2000 to 11.9% in 2006.
• Among age groups, children experienced the largest decline in incidence; 3.7 percentage points since 2000 to 14.4% in 2006.
• Working families recorded a slight drop in their incidence of low income between 2000 and 2006. Although these families recorded a relatively low rate (7.3%), they still accounted for 35% of low income families and for 44% of low-income children in 2006. Working families are those whose MIR worked for pay at least 910 hours during the reference year.
• Of the five socio-demographic categories of MIRs identified as being disproportionately at risk of experiencing persistent low income, all except Aboriginal Canadians and recent immigrants had statistically significant improvements in their low income situation between 2000 and 2006. The incidence of low income for economic families whose MIR belonged to one or more of these groups fell from 35.9% to 28.4% over this period.
• The national incidence of low income in 2006 was higher using the MBM than Statistics Canada's post-income tax Low Income Cut-offs (LICOs-IAT) (10.5%).¹ This pattern was repeated for all sub-groups with the exception of seniors and unattached individuals aged 45-64 (see table above).²

Depth of Low Income

• Nationally, the depth of low income (the average gap between the disposable income of all economic families in low income and their low-income thresholds expressed as a percentage) improved slightly over the seven-year period, falling from 32.2% in 2000 to 31.4% in 2006, although this change was not statistically significant.
• The depth of low income was less for the low-income elderly (19.8%) and low-income children (25.0%) than for the working-age population (34.3%).
• The depth of low income for working poor families was considerably lower (31.5%) than for low-income families where the MIR had zero hours of paid work (38.9%) or worked for pay between 1 and 909 hours (37.1%).
• Among high-risk groups, unattached persons aged 45 to 64 had the largest depth of low income (41.2%), while families where the MIR was a lone parent had the smallest (26.8%) in 2006.

Persistence of Low Income

• While 22.2% of persons aged 18 to 60 in 2002 experienced low income for at least one year between 2002 and 2006 using the MBM, 7.5% experienced persistent low income over this period. That is, they were in low income for most of the period. Similarly, 26.5% of all children under age 14 in 2002 experienced low income at least one year between 2002 and 2006, but 11.0% experienced persistent low income.
• Between the periods 2000 to 2004 and 2002 to 2006, the incidence of persistent low income fell slightly for all individuals (from 8.1% to 7.5%) and for children under age 14 (from 11.6% to 11.0%).
• The incidence of persistent low income between 2002 and 2006 for children in working-age families whose MIR worked for pay at least 910 hours a year in 2002 was 5.1%, well below the incidence of persistent low income for those with zero hours of paid work in 2002 (60.8%) and for those with between 1 and 909 hours of paid work (32.1%).